Miller Value Partners, an investment management company, released its “Deep Value Strategy” third-quarter 2022 investor letter. A copy of the same can be downloaded here. In the third quarter, the Deep Value Strategy was down 14.67% net of fees compared to the S&P 500 Index, which was down 5.74%. Year-to-date, the strategy was down 23.4% (net of fees). In addition, please check the fund’s top five holdings to know its best picks in 2022.
Miller Value Partners highlighted stocks like Nabors Industries Ltd. (NYSE:NBR) in the Q3 2022 investor letter. Based in Hamilton, Bermuda, Nabors Industries Ltd. (NYSE:NBR) is a drilling and drilling-related services provider for oil and natural gas wells. On November 10, 2022, Nabors Industries Ltd. (NYSE:NBR) stock closed at $170.88 per share. One-month return of Nabors Industries Ltd. (NYSE:NBR) was 47.92% and its shares gained 79.66% of their value over the last 52 weeks. Nabors Industries Ltd. (NYSE:NBR) has a market capitalization of $1.609 billion.
Miller Value Partners made the following comment about Nabors Industries Ltd. (NYSE:NBR) in its Q3 2022 investor letter:
“During the quarter, our two largest detractors were Nabors Industries Ltd. (NYSE:NBR) and Gannett (GCI); both companies’ share prices in the market were down more than 20%. Nabors’s share price was negatively impacted by the recent pullback in energy prices as the shares fell more than 50% from its 52-week high. We viewed the recent pullback as an opportunity, increasing our position size during the quarter. Nabors remains significantly mispriced in our opinion and is well-positioned to benefit from strong ongoing demand in their global high spec rig fleet.
We believe the marketplace is overlooking the ongoing improvement in industry utilization rates, as larger players have favored profit improvements of their current fleets versus undergoing a new build rig cycle. In addition, the Nabors heavily discounted share price appears to us to offer investors a wonderful opportunity to obtain their NDS (Nabors Drilling Solutions) segment at a fraction of its fundamental value.
The segment’s proprietary technology offerings are growing revenues more than 30%, with greater than 50% gross margins and given its capital light model, converting 90% of segment EBITDA (Earnings Before Income, Taxes, Depreciation, and Amortization) to free cash flow!! As the company’s NDS segment and International Joint Venture continue to scale, we believe the marketplace will recognize the reduced free cash flow cyclicality and free cash flow conversion improvement to greater than 50% of EBITDA over the long term…” (Click here to read the full text)
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Nabors Industries Ltd. (NYSE:NBR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 24 hedge fund portfolios held Nabors Industries Ltd. (NYSE:NBR) at the end of the second quarter, which was 26 in the previous quarter.
We discussed Nabors Industries Ltd. (NYSE:NBR) in another article and shared the stocks about which hedge funds were right. In addition, please check out our hedge fund investor letters Q3 2022 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
